A recent incident and a conversation with a traveling friend highlighted the confusion and importance of international travel insurance. To begin most people consider travel insurance too expensive and on top of that they see it as very confusing and there’s truth in those beliefs.
Please note that this is written with a focus on American travelers but we are also aware of similar plans offered in Canada and other countries, but you will need to explore options based on your home country.
There are a number of different categories and types of travel insurance that apply to a number of travel plans and that can complicate the insurance decision. Generally, insurance is available to cover problems in five specific areas:
- Trip Cancellation and Interruption
- Theft of Property
- Health and Accident coverage
- Medical Repatriation
- Life insurance
In truth, most travelers we talk to are too casual in deciding on travel insurance. This article will focus on three main areas:
- First is a concern about having to cancel an expensive trip at the last minute and losing deposits and prepaid money.
- The second is travel interruption caused by missing air connections or a cruise sailing.
- Lastly are medical cost concerns while being out of the country.
One area that requires attention is exactly what are the conditions where the coverage takes affect and where it doesn’t apply. Insurance policies are very specific legal documents and all too often coverage we thought we had doesn’t apply in too many circumstances. Just recently in the news were a number of travelers faced with giving up their travel costs or putting their health in jeopardy because of the Covid pandemic.
As the Corona virus started spreading around the world and countries started closing their ports, cruise ships and their passengers were placed in a difficult position. Initially cruise ships started adjusting their itineraries instead of canceling cruises. Passengers that were worried about their health and wanted to cancel their cruise or were even acting on the advice of the government, soon discovered that insurance companies were concluding that those concerns were not covered by the cruise cancellation insurance and offered no refunds.
Even if the cost of insurance is significant, everyone should consider and evaluate what potential financial risk there are versus the actual cost of the insurance policy. With a long cruise the cost could be very high and while the insurance could be costly the loss could be even more significant if you have to cancel or should simply miss a sailing.
One area where many people leave themselves seriously in jeopardy involves international medical emergency insurance. Far too many people falsely think that their health insurance will cover them when they’re out of the country but the truth is that is rarely the case. Unless your health insurance specifically indicates that it covers international travel you are risking a catastrophic loss. In one example we know about a retired couple traveling in Europe believing that Medicare and their supplement insurance covered them. They learned the terrible truth after a serious stroke left them with a quarter of a million dollars in medical bills. Another couple we know just made a one day trip over the border into Canada to visit with friends. Several days later the medical expenses after a heart attack added up to almost $100,000 with no reimbursement from Medicare.
When booking a cruise one option is cruise insurance. Because many cruises involve international destinations these cruise policies provide medical cost reimbursement (up to specific amounts) and property theft and loss protection. Some also, but not all, cover the cost of medical repatriation. While cruise insurance is convenient you do have other options for insurance that could be less expensive and provides more coverage.
Airports often have outlets for inexpensive short term air travel insurance but it is mainly focused on the life insurance component and not on medical costs or trip interruption which is usually the airlines responsibility.
Specific Situational Considerations
Cruise Only Insurance – Say you are taking a Mediterranean cruise with flights into and out of the sailing port. A cruise insurance policy usually provides an appropriate amount of coverage for your cruise trip. Most cruise policies also cover medical expenses if you need care in a local clinic or hospital while a passenger on the cruise with some covering medical evacuation and repatriation. The same policy usually extends coverage while on booked cruise/land packages and the flights to and from the cruise port.
Cruise with an extended land itinerary – If you are taking that Mediterranean cruise but then plan to go off on your own for a couple of weeks in Europe, chances are that cruise policy will terminate on disembarking the ship. For that reason you need to understand that you will not be covered for medical emergencies above the international coverage and limits of your American health insurance policy which can often be zero. For retirees Medicare does NOT cover international medical care. If you opted for one of those no cost Medicare regional groups you have no international coverage.
Frequent InternationalTtravel – If you are a frequent international traveler it is most important to analyze your risk and how much you are comfortable paying for insurance. You have options of buying a complete medical plan (Geoblue) , a medical evacuation plan (EA+) or a complete annual insurance policy (Allianz, Amex) that offer some coverage in virtually all areas. One caution is that most annual policies only provide coverage while on trips of less than 60 days each.
In our case we take a number of cruises and international trips a year and our biggest concerns are medical emergencies and evacuation, so we keep an annual MedEvac plan in place. Our Medicare supplement insurance offers adequate (we hope) medical coverage for now and we will buy cruise policies on individual trips if it is a long and costly cruise.
Annual Travel Insurance Policies – There are complete annual travel policies, which should be considered if you travel internationally often. Generally they have lower limits of coverage, especially in areas like trip cancellation and property loss. For example, most annual policies limit cancellation protection to $2,000 per year. To the right is a recent annual generic quote provided by Alianz for a typical retired couple.
Special Note: 26 European countries require health insurance to visit.
In early 1995 twenty-six European countries signed an agreement that abolished enforcing their borders between member states. As a result the area mostly functions as a single country for international travel purposes, with a common visa policy. Anyone from a country that requires them to apply for the Schengen visa to enter Europe must provide proof of international health insurance. Americans and Canadians along with a number of other nationals do not need this visa to visit and therefore do not need to provide proof of insurance.
The 26 countries in the zone are Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland.
Technically a letter from your insurance company is required, and this needs to mention that you will be covered in Europe for any medical, evacuation and repatriation expenses during your whole stay. The medical expenses have to be covered for at least 30,000 Euros.
This post was prompted by a travel friend contacting me wanting to know what travel insurances we use. We compared notes and kicked around some scenarios and decided it was a good subject to explore in greater depth.
Also thanks to a visitor from Reviews.com who directed us to their extensive article on buying travel insurance and if you have questions about specific recommendations I would highly recommend reading this article from Reviews.com HERE.
INSURANCE LESSONS FROM COVID-19
A number of recent travel articles about travel and insurance are now recommending “Cancel for Any Reason” Insurance but this may be a bad choice especially since most major cruise companies, in an effort to get bookings back, have offered last minute cancellations as part of their policy. In comparing “Cancel for Any Reason” insurance it seems that in many cases the premiums do not warrant the limited level of reimbursement so be sure and do the math before buying.
In addition most travel insurance policies will only reimburse you for canceling your cruise under specifically identified conditions. Most of those involve medical issues with you or immediate family. Some policies also provide for work related emergencies. Based on our experience with COVID-19 we now see a number of issues we hadn’t considered when looking at travel insurance.
Our Recent Experience Involving COVID
We were recently booked on a pair of cruises that went from Singapore to Rome with 14 ports of call and had paid in full (inside 90 days). As coronavirus issues began to appear our cruising companions cancelled early on and got full credit towards a future cruise. As things began to get worse we contacted the cruise line and they were no longer agreeing to issuing credits. 48 hours later they cancelled the cruise, gave refunds along with future cruise credits at 125%. After that we contacted our independent insurance carrier and were informed that they weren’t accepting claims involving coronavirus but might consider our air portion because our cruise was cancelled. After that we just contacted the airlines and got future credits to use within 12 months.
Insurance And Travel Advisories
It seems that under standard cancellation coverage, you cannot cancel due to travel advisories from the CDC, State Department or other government agencies. You can’t cancel because the cruise line changed the itinerary, or for fear of terrorism, or concerns about epidemics or natural disasters. Before booking a policy you should now investigate these issues for coverage.
Because of these issues recent travel articles are suggesting that CFAR (cancel for any reason) policies are the answer. If you want the freedom to cancel your trip for any reason at all — and still get reimbursed for travel costs there are CFAR policies available. Looking into this option we’ve discovered many aren’t covering as much as theses articles suggest.
We have another 30 day cruise scheduled in the fall across the Pacific and around Japan so we decided to investigate CFAR policy costs for that itinerary. Our current standard policy covering that cruise cost us about $350. We received a CFAR quote from the same carrier that would reimburse our “deposits” only should we cancel for any reason for a premium of $1,500 but would not offer reimbursement the two weeks before the trip. That exceeds our currently paid deposits by almost $800 with questions about the actual costs, in full, being covered making this a bad deal.
If anyone finds CFAR insurance that makes more sense we’d love to hear about it.
Insurance Is Still Important
We still believe travel insurance should be an important part of your travel plan. Its benefits usually include trip interruption, emergency medical and emergency transportation, travel delay, lost luggage and more but we need to understand there are major exclusions like pandemics, natural disasters, insurrections and government actions.
You also need to understand that in order to file a claim you need to submit documentation. That can include proof of your property loss and its value like purchase receipts along with a police report of the incident. Health claims need doctor and hospital reports and bills.
The burden is on all of us travelers to educate ourselves on things like terrorism, tropical storms and disease outbreaks affecting our vacation destination. Also if you choose to buy standard coverage after an event becomes “known” even if you didn’t know about the situation, your benefits could be severely limited, making that travel insurance policy almost useless.
Because we frequently travel internationally our health insurance does have an international travel component that pays up to $50,000 for each of us with a lifetime cap of $50,000.
We carry an annual medical evacuation and repatriation policy that over the past number of years has seemed reasonably priced to us. The cost for the two of us has been less than $200 for the annual plan and offers $500,000 in coverage. It should be noted that this is not medical insurance and will not pay for doctors and hospitals except for expenses in getting you and your companion home. One of the largest is EA+ Emergency Assistance Plus